The Theory of Profession: Accountability, qualifications, entry

and ethics - a preliminary discussion and early findings on the

current state of forensic accountancy in Australia.

Yajie (Sarah) Chen

School of Accountancy,
Queensland University of Technology
GPO Box 2434
Brisbane QLD 4001
Email: yajie.chen@connect.qut.edu.au

Jeanette Van Akkeren

School of Accountancy
Queensland University of Technology
GPO Box 2434
Brisbane QLD 4001
Email: Jeanette.vanakkeren@qut.eud.au

Abstract

This paper presents an exploratory study on the current structure of the forensic accounting industry

in Australia. Extant literature identifies the complex nature and role of forensic accountants, and

identifies the broad areas of expertise that may be required of a forensic accountant due to the many

services they offer. Using the Theory of Profession to guide data collection and analysis from archival

research, Australian forensic accounting websites were analysed using qualitative content analysis to

determine whether this relatively new career path can be considered a ‘profession’ in its own right.

Findings demonstrate that there is a lack of consistency within the industry in regard to formal

qualifications, skills and experience. Further, there is no formal control of entry, and although the

ICAA created the Forensic Accounting Special Interest Group (FASIG) to address such issues, only

forensic accountants choosing to join this group are held accountable for their actions.
 The Theory of Profession: Accountability, qualifications, entry
and ethics - a preliminary discussion and early findings on the
current state of forensic accountancy in Australia.
Abstract: This paper presents an exploratory study on the current structure of the forensic
accounting industry in Australia. Extant literature identifies the complex nature and role of
forensic accountants, and identifies the broad areas of expertise that may be required of a
forensic accountant due to the many services they offer. Using the Theory of Profession to
guide data collection and analysis from archival research, Australian forensic accounting
websites were analysed using qualitative content analysis to determine whether this relatively
new career path can be considered a ‘profession’ in its own right. Findings demonstrate that
there is a lack of consistency within the industry in regard to formal qualifications, skills and
experience. Further, there is no formal control of entry, and although the ICAA created the
Forensic Accounting Special Interest Group (FASIG) to address such issues, only forensic
accountants choosing to join this group are held accountable for their actions.

Keywords: Forensic accounting, Theory of Profession, Qualitative, Content Analysis

INTRODUCTION

As the rate of fraud continues to climb in Australia, the number of professionals whom

industry describes as forensic accountants is rising exponentially. However, there is some

debate in relation to the role of forensic accountants and questions relating to what

qualifications, skills and experience they should hold. The Association of Certified Fraud

Examiners (ACFE) - the world's largest anti-fraud organisation and (according to their

website) the premier provider of anti-fraud training and education - defines forensic

accounting as the use of professional accounting skills in matters involving potential or actual

civil or criminal litigation (ACFE, 2011). Smith and Crumbley (2009) posit that forensic

accounting practices integrate a variety of skills including accounting, criminology, computer

forensics, litigation services and auditing investigative services. Providing a narrower focus,

1
Weil et al. (2001) suggest that forensic accounting is the process of performing accounting

analyses suitable to the legal community and the courts, forming the basis for discussion,

debate and ultimately resolution of a dispute. Commonalities between the various definitions

reside in the areas of litigation services, accounting investigation and preparing court-ready

evidence, all of which require a certain level of education and/or expertise. However, it is

unclear what, if any, formal qualifications are required to work as a forensic accountant in

Australia. In addition, there is little empirical evidence that identifies what regulation and

monitoring occurs in the Australian forensic accounting industry.

This paper explores the role of forensic accountants in Australia in an effort to understand

how this industry is currently structured. Data collected will provide insights into the

qualifications, experience, range of duties and skills forensic accountants hold, and, in

addition, demonstrate whether control of entry exists, and what relevant certifications are

currently held by forensic accountants practicing in Australia. Therefore, the research

question for this study is:

Are Australian forensic accountants’ adequately qualified to undertake forensic

accounting work and does the industry protect public interests?

The following section presents the extant literature on the current state of forensic

accountancy within and outside Australia and compares this with the Theory of Profession, a

conceptual framework adapted for this study and used to determine whether forensic

accountants could be considered a ‘profession’. This is followed by a description of the

methodological approach taken in this study, and a discussion of the findings and conclusion.

Limitations of the study are also provided, along with suggestions for future research.

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LITERATURE

This section reviews literature on services that forensic accountants offer and on the Theory

of Profession framework. Firstly, empirical studies are reviewed that provide descriptions of

various services offered by forensic accountants, providing the context for this study.

Secondly, a discussion on defining the term ‘profession’ precedes an overview of the Theory

of Profession framework including a discussion on the relevance of the framework to this

study.

The Complex Nature of Forensic Accounting

The complex nature of forensic accounting is part of the appeal for many accountants [and

others] to enter the field (Kranacher et al. 2008). Adding to the complexity of this profession

is the range of services a forensic accountant may be asked to perform. We suggest that there

are three broad categories that describe forensic accounting work: investigation of fraud,

litigation and business advisory services and expert witnessing, and each is addressed next.

Investigation of fraud

A core role of forensic investigation concentrates on the identification, explanation and

communication of the clues hiding behind economic and reporting events. The focus is on

white-collar crime, which is defined by Gottschalk (2011) as a crime against property for

personal or organisational gain by concealing or deceiving, often by people with wealth,

higher education and social connection. Due to the nature of white-collar crime, fraudsters

are often difficult to detect, with some suggesting that fraud is often not discovered until, on

average, 18 months to two years after it began (Gottschalk, 2011).

In Australia, a KPMG Forensics (2010) report suggests that the average value of fraud in this

country is $545,983 per case (from 102 cases investigated). The most common categories of

3
crime requiring investigation by forensic accountants in Australia include money laundering,

manipulating balance sheets and bribing public officials to achieve their purpose (Gottschalk,

2011). Consequently, the investigation of fraud in business, plus a range of money laundering

schemes, has become an important part of forensic accounting investigation. Other types of

white-collar crime in addition to occupational fraud include embezzlement, stealing of

commodities, tax evasion and manipulation of records, all of which may require substantial

knowledge of both accounting and law.

With the increase in white-collar crime and the consequent increase in demand for forensic

accountants in Australia, determining whether forensic accountants have the skills necessary

to undertake fraud investigation is an important part of this study. The next section outlines

another category of forensic accounting work, that is, litigation and business advisory

services.

A Legal Minefield - Litigation & business advisory services

Inevitably, disputes arise involving individuals, businesses, governmental and non-

governmental bodies, and may concern a grievance in respect of another party's action or

inaction as a result of which a party will have been affected, suffering monetary or non-

monetary loss (Okoye & Akamobi 2009). The loss could be as a result of a breach of contract

or it could that a body failed to make a correct decision in accordance with the law. When

this situation occurs, a forensic accountant may be required to act as an advisor, providing

professional assistance to lawyers in the litigation process (Reinstein & Lander 2004). Those

involved in litigation support (such as forensic accountants) perform investigative

accounting, auditing, tax determinations, provide expert testimony, or produce financial

valuations in dispute situations. Literature on a forensic accountants’ role in litigation in

Australia is very difficult to find, as most empirical research is based in the US (Heitger &

4
Heitger 2008; Hanson et al. 1995). Therefore, the qualifications held by forensic accountants

undertaking this type of work in Australia are not clear.

The American Institute of Certified Practicing Accountants suggests that because of the

complex nature of litigation, forensic accountants need to use their knowledge, skills,

abilities, experience, training and education to provide value in their litigation advice and

support for legal actions to attorneys, judges and juries (AICPA 2004). We suggest that, in

Australia, forensic accountants may be required to provide litigation services; however, there

is an absence of literature that discusses this or identifies how forensic accountants are trained

for this role. Litigation consultations often involve complicated accounting, legal, tax and

financial issues, which will require forensic accountants to have specialised knowledge and

experience (AICPA, 2004). A forensic accountant may also provide services to calculate the

loss suffered by the parties involved in business disputes and offer their professional opinions

and help to resolve disputes (Okoye & Akamobi, 2009). Therefore, having formal

qualifications and experience in this field may be an important consideration for forensic

accountants, and is an area this study will explore.

Other ways forensic accountants may assist in litigation and business advisory roles include

obtaining important documents that can be assessed as evidence; reviewing related

documentary records to clarify possible financial loss; reporting to council during the pre-trial

period; giving opinions to the lawyers; helping to settle discussion and negotiation; and

providing professional advice on the strengths and weakness of the opposing expert’s damage

reports (Okoye & Akamobi, 2009). Therefore, the range of skills required for litigation

advisory services is very broad, and forensic accountants may require a level of professional

training. Further, firms offering these services may need to provide adequate supervision for

forensic accountants/investigators who are assigned to litigation services as it is the firms that

are responsible for the consequences resulting from a forensic accountants’ work (Hanson et

5
al., 1995). Whether this occurs in Australian firms offering these services at this time is

unclear and therefore, this study will investigate this issue further. The next section identifies

the role of forensic accountants as expert witnesses.

A day in court - Expert witness

Often forensic accountants can resolve problems before any expert trial testimony is required.

However, forensic accountants sometimes need to testify as expert witnesses if the dispute

reaches the court room and the judges and juries do not have specialised knowledge to reach

a conclusion without their testimony (Okoye & Akamobi, 2009). The privilege was granted

for forensic accountants to testify their conclusions based on their knowledge and experience.

Consequently, an expert witness can make or break a case, which heavily depends on the

preparation made by a forensic accountant (Reinstein & Lander, 2004), and therefore, they

become a very influential force in court trails (Hopwood et al., 2008).

In regard to the qualifications of expert witnesses, Heighter and Heighter (2008) indicate

there are no detailed rules or set of clear criteria to qualify forensic accountants to perform

expert witness services. In some cases, the expert will only be paid if the case succeeds,

which may impact on the independence of expert witnesses’ ability to provide objective

opinions (Harrison 2001). Under these circumstances, it is argued that it may be necessary to

professionalise the service by providing more specific guidelines and relevant training for

forensic accountants (Harrison, 2001). However, it is difficult to determine how these

services can be professionalised in the current literature.

It is also suggested that objectivity and transparency are two important indicators to guide

forensic accountants in rendering expert witness services (DiGabriele 2010). The neutrality of

an expert is crucial, as their accreditation will be built during the process of testifying in the

court room. In addition, in the US, the educational background pertaining to accounting,

6
auditing and the legal system, the professional certificates acquired in the forensic accounting

realm and the work experience of court expert testimony will all be considered as vital

indicators for judges and juries to determine the qualification of an expert witness (Heitger &

Heitger, 2008). In Australia, it is unclear what type of legal qualifications and/or training is

required for a forensic accountant to be considered an expert witness and this research aims

to gain insights into this. Exacerbating the problem are concerns about bias, for example,

Harrison (2001) argues that many judges have started to doubt the impartiality of expert

witnesses in the forensic accounting realm. This is because forensic accounting experts

compromise their objectivity if they render both litigation consultation services as well as

undertaking an expert witness role, therefore playing dual roles of expert and advocate for

their clients instead of providing professional reports (DiGabriele, 2010).

More attention needs to be paid to the skills required by forensic accountants in litigation and

expert witness testimony and educational innovation in the forensic accounting curriculum is

needed (DiGabriele, 2010). As Lawrence (1998) suggests, it may be necessary to control

entry into the forensic accounting profession and that it may require certain qualifications for

those accountants who want to specialise in forensic accounting litigation and expert witness

services. However, it is difficult to source empirical research on the ability and credibility of

forensic accountants who provide expert witness services in Australia. This study seeks to

identify what control of entry is in place when hiring forensic accountants in Australian firms

offering these services to their clients.

As the literature demonstrates, the various services that forensic accountants may be required

to undertake are broad and complex. Empirical evidence presented so far indicates that

forensic accountants have a professional and diverse role to play in helping to combat the

increasing occurrence of white-collar crime, either as an investigator, advisor and/or expert

witness. The Theory of Profession helps to identify whether forensic accountancy could be

7
considered a ‘profession’ in a traditional sense and what characteristics define a professional

forensic accountant. The next section will discuss the characteristics, attributes and control

issues related to the term ‘profession’.

Confusion over ‘Profession’

While there is no agreed definition of a profession, the Australian Council of Professions

defines it as:

A disciplined group of individuals who adhere to high ethical standards and uphold

themselves to, and are accepted by, the public as possessing special knowledge and

skills in a widely recognised, organised body of learning derived from education

and training at a high level, and who are prepared to exercise this knowledge and

these skills in the interest of others. Inherent in this definition is the concept that the

responsibility for the welfare, health and safety of the community shall take

precedence over other considerations (ACCC, 2011)

We are familiar with many of the more traditional professions such as doctors, pharmacists,

lawyers, architects and engineers. It would be fair to say that ‘Accountancy’ is generally

accepted within Australian society as a profession, and, in applying the above definition,

meets the various concepts outlined in the definition. For example, certified accountants must

hold tertiary level qualifications, have special knowledge and skills and are seen as using

these skills for the betterment of both society and individuals. Entry into the profession is

controlled to a point by groups such as CPA (Certified Practicing Accountants) and CA

(Certified Accountants). It is a conundrum, therefore, that forensic accountants do not need to

meet the standards mandated for other professional accountants, and is particularly

perplexing when you consider the complex nature of forensic accounting work described in

8
the previous section. This section provides an overview of the Theory of Profession, and then

applies this to the field of forensic accountancy.

Acknowledged as a leading researcher on the Theory of Profession, Abbott (1988) suggests

three potential rights for a profession to claim jurisdiction: within the legal framework,

through public opinion, and in the workplace. He defines a profession’s social structure as

including groups, controls, and worksites that work cohesively to create an improved

professional model. This structure influences professions in the following ways:

• The more organised a profession, the more effective the claim of jurisdiction

• Organisation into a single, identifiable association is a pre-requisite to any

public/legal claim of jurisdiction

• Level of formality of organisational structure may provide advantage/flexibility in

workplace competition

• Highly organised, resilient internal structures.

Fournier (1999), in describing the profession of accounting, presents a model of

professionalism as a disciplinary logic that includes criteria of legitimacy, public good, social

welfare, as well as professional competence based on knowledge, conduct and control. He

adds that to be a professional requires appropriate conduct as well as the ability to gain and

retain a body of knowledge on a subject. For the purposes of this study and to address the

research problem (that is, Are Australian forensic accountants’ adequately qualified to

undertake forensic accounting work and does the industry protect public interests?, an

adapted model from work by Canning & O’Dwyer (2001) and Candilis (2009) will represent

the Theory of Profession for forensic accounting. The following section outlines the

9
conceptual framework used in this study as a lens to better understand the Australian forensic

accounting industry as it relates to this framework.

CONCEPTUAL FRAMEWORK

The Theory of Profession provides an analytical lens with which to understand the

characteristics, attributes and structure of the forensic accounting profession in Australia. The

framework includes characteristics that previous research has identified explains how

membership to a profession is achieved by stakeholders. In an accounting context, The

Theory of Profession is described as the power and reputation granted by society to the

profession in terms of protecting public interest where professionals acquire a body of

knowledge, which is connected to the major needs and values of the social and accounting

system (Pollock & Amernic, 1981). Professions are expected to commit their services to the

interest of the public rather than the interests of their clients or self-interest (Pollock &

Amernic, 1981). Therefore, accounting professionals are regarded as a mechanism to protect

public interest as they are required to be act above and beyond material incentives (Larson,

1977). In the context of this study, the Theory of Profession provides a useful framework for

identifying the functions and attributes of the profession (Canning & O’Dwyer, 2001), which

is consistent with the necessary requirements and qualifications to work in the field of

forensic accountancy.

Canning and Dwyer (2001) present the Theory of Profession framework with five attributes

that contribute to accounting ‘professionalism’, and ultimately, the protection of public

interest. These attributes are:

• test of competence,

• further study and relevant training,

• a register of qualified members,

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 • enforcement of a high standard of professional conduct, and

• organisation within a specific occupation.

Testing the competence of members is a basic element of the theory as it requires members of

the profession to have a university educational background, and also high-level technical

skills (Gaffikin, 2009). Ongoing development, including study and further training, is also

suggested as very important for a professionals’ career development as this may help to

enhance a forensic accountants’ ability to perform various services (Kranacher et al. 2011).

To achieve this goal, Devonport (2009) posits that members should form an organisation that

controls entry into the profession with members determining the specialised knowledge that

is necessary. In agreement, Canning and O’Dwyer (2001) suggest that registering qualified

members would be a useful way to control entry into the profession to ensure that members

meet the various standards required.

Protecting public interest is also an important aspect of the theory. For example, Maurice

(1996) argues that it is essential for the accounting profession to establish ethical codes along

with a strict, accountable and transparent disciplinary process to implement them if the

accounting profession intends to achieve public recognition and trust. Therefore, to some

extent, the integrity of the profession relies on the effectiveness of implementing these codes

(Maurice, 1996). To protect public interest, accountability and transparency were two crucial

indicators, as the general public could assess whether the professions acted in the public

interest through these two indicators (Canning and O’Dwyer 2001; Gray, et al. 1997). Adding

to the complexity of identifying what professionalising forensic accounting should include,

Candilis (2009) supports Canning and O’Dwyer (2001) and Gray et al. (1997) by suggesting

that in addition to formal qualifications and training programs, moral and ethical values

should also be a requirement. He posits that honesty and integrity need to be part of the

broader definition of a forensic accounting professional, emphasising the importance of

11
forensic accountants having these attributes. The Theory of Profession framework was

therefore adapted from work by Canning and O’Dwyer (2001) and Candilis (2009) and is

presented below:

Professions:
Functions and Attributes

Body of Knowledge Control of Entry Ethical Codes of

Conduct

Protection of public interest

Figure 1: Framework adapted from Theory of Profession (Canning & O’Dwyer, 2001) and
Robust Model of Profession (Candilis 2009)

The three attributes: Body of Knowledge, Control of Entry and Code of Ethics will be used as

the benchmarks to assess the profession of forensic accountancy in Australia. Each of these

characteristics and their attributes is explained below.

Body of Knowledge

A body of knowledge includes formal university qualifications, skills, training and

experience. It is argued that it is necessary for a professional to acquire the knowledge base

for serving public interests. However, Devonport (2009) suggests that the capability of

fulfilling professionals’ responsibilities to the public does not merely depend on the level of

12
knowledge they obtained, but also on the standard of education they acquired. He adds that

the development of the accounting profession to date has resulted from the interaction

between universities and relevant institutes (eg CPA, ICAA), as university education was

considered a high-level education (Devonport, 2009). Skills, training and experience are also

expected to be acquired by professional accountants for current and future practice (Gaffikin,

2009). Relevant experience accumulated, meaningful skills achieved and ongoing training

received could help strengthen the profession as forensic accountants would be required to

update their expertise, much like the continuing medical education (CME) points systems

used in the medical industry.

Control of Entry

Professions are distinguished from trade unions because they use organisations to take control

over entry (Devonport, 2009). Normally, a robust qualifying examination system will be used

to test the competence of persons who wish to enter into a profession (Devonport, 2009). In

addition, it is argued that a register of qualified members should be required by the profession

(Canning & O’Dwyer, 2001). If a forensic accountant passes a qualifying exam, he/she can

then register his/her qualification with the profession, and, in doing so, the professional

organisation will know the details and number of members and provide relevant ongoing

training for their members (Devonport, 2009).

Code of Ethics

A profession must have strong instructions for its members to follow, as this can help to

ensure that members can fulfil the expectations from society (Cohen & Pant, 1991). It is

posited that it is necessary to design a separate ethical course for accounting curricula to

enhance ethical education by delivering appropriate ethical values to potential members of

the profession (Cohen & Pant, 1991). Gaffikin (2009) adds that each member of the

13
profession should adhere to a code of conduct as the ethical codes will properly reflect the

activities of members in respect to the expectations of the public. Ethical codes can also help

to balance the interest between clients, forensic accountants and the entire community

(Gaffikin, 2009). Therefore, ethical code of conduct is recognized as the third characteristic

for forensic accountants to be recognised as professionals as the code will guide the

behaviour of members to deliver professional services in an appropriate manner and, as

Fournier (1999) suggests, help to build the subjectivity of the professional practitioner.

The Theory of Profession therefore incorporates the three characteristics that together lead to

the ultimate description of a ‘profession’. In the forensic accounting industry in Australia,

there is a lack of empirical evidence that identifies whether forensic accountants meet the

standards required to be considered a profession in its own right. The following section

details the method used in this study to identify the characteristics and attributes currently

held by forensic accountants practicing in Australia and compares those findings with the

Theory of Profession framework.

METHODOLOGY

As this research is a descriptive and exploratory study, a qualitative research design was

considered the most appropriate as it allowed the researchers to explore the distinctive nature

of social phenomena that this study seeks to determine (Marshall & Rossman, 2011). A

qualitative approach using archival research design was selected for this study for two

reasons. Firstly, there is an absence of empirical research on how the Theory of Profession is

applied in forensic accounting research; and, secondly, qualitative archival research design

allowed the researchers to acquire data that concentrates on facts that are meaningful in

answering the research question for this study (Collis & Hussey, 2003). Content analysis was

used to analyse the thirteen websites and eighty-seven forensic accountants (FAs), as it

14
allowed the researchers to identify, code and categorise the primary patterns in the data

(Cavana et al. 2001). Marshall and Rossman (2011) add that content analysis can be used to

analyse different forms of material, including text, images, video and web sites.

A structured approach was used for data collection as a predetermined data collection

framework was applied to identify, categorise and analyse the content from the websites for

this research. The three characteristics that describe the Theory of Profession framework:

Body of Knowledge, Control of Entry and Ethical Codes of Conduct were further broken

down into categories that describe the various aspects of each characteristic. The coding is

presented in Tables 1, 2, 3 and 4 in the Findings section (detailed descriptions of the coding

are available in the appendix). Purposeful sampling was used in this study to enable the

researchers to choose information-rich samples for in-depth understanding of the forensic

accounting industry (Patton 1990) as selecting websites from firms that have the information

required to answer the research question was imperative. The following section presents the

findings from the content analysis of the websites of thirteen SME forensic accountancy

firms.

FINDINGS

The coding (see appendix) is applied in Table 1 and identifies the qualifications of forensic

accountants (FAs) in terms of their university educational background, relevant skills and

experience. The first three columns summarise university qualifications of forensic

accountants. The following two columns describe general accounting certification and

forensic accounting certification qualifications. The remainder of the table concentrates on

the type of experience forensic accountants hold. Table 2 presents the findings on the skills

that FAs currently provide.

15
Table 1: Coding for Characteristic ‘Body of Knowledge’ - Education and Experience
Company Body of knowledge (BoK)
UD AR LR CR FA <20 <25 <30 EW FI LA CF CF
SME 1 Yes Yes Yes No No Yes Yes No Yes No No
SME 2 Yes Yes No Yes No Yes Yes Yes Yes Yes Yes
SME 3 Yes Yes Yes No No Yes Yes Yes No Yes Yes
SME 4 Yes Yes No No No Yes No No No No No
SME 5 Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes
SME 6 Yes Yes No No No Yes Yes Yes Yes No No
SME 7 Yes Yes No No No Yes Yes Yes Yes No No
SME 8 Yes Yes No No No Yes No Yes Yes No No
SME 9 Yes Yes No No No Yes No Yes Yes Yes Yes
SME 10 Yes Yes Yes No Yes Yes No No Yes No No
SME 11 Yes Yes No No No Yes No Yes Yes No No
SME 12 Yes Yes Yes No No Yes No Yes No No No
SME 13 Yes Yes Yes No No Yes Yes Yes Yes Yes Yes

The findings for ‘Education’ demonstrate that FAs have a university education in a broad

range of accounting related degrees, for example, Bachelor/Master of Business (Accounting),

Bachelor of Commerce and Bachelor of Economics. In addition, some forensic accountants

have majored in law, legal studies and transnational crime prevention. Others hold a Bachelor

degree or Master of Science, with a bias towards data analysis, computer forensics and

security. However, it is noted that only two FAs were found to hold a specialized forensic

accounting degree - a Master of Forensic Accounting - from the 87 FAs reviewed.

In regard to ‘Experience’, the average number of years FAs have worked in the industry

varies, with the lowest average accumulated number of years at 15, and the highest

accumulated number of years at 28. Forensic accountants currently have substantial working

histories in accounting-related areas and have accumulated various experiences for providing

an array of forensic accounting services such as litigation advisory services, court room

testimony, forensic investigation and computer forensics investigation. Findings also indicate

16
that accounting firms prefer to hire experienced accountants to undertake forensic accounting

services rather than university graduates due to the complex nature of these services.

Of the thirteen SMEs, seven have practicing FAs who are identified as having experience in

testifying as an expert witness, yet all thirteen firms offer litigation support services to their

clients. Only seven firms provide forensic investigation services, which due to increased

demand, is considered an important service, while ten accounting firms provide litigation

advisory services. Finally, in terms of research and publication experience, only two forensic

accounting firms have practicing FAs who demonstrate evidence of having undertaken their

own research on forensic accounting topics.

Skills acquired by FAs are an important component of the body of knowledge characteristic

(Table 2) and include services such as litigation advisory, business valuation, expert

witnessing, quantification of loss and E-Discovery (see appendix for detailed breakdown).

Table 2: Coding for Characteristic ‘Body of Knowledge’ - Skills

Company Body of knowledge (BoK)
*AS *CS D&E BV ET QD LS I&A RA ED DD DA
SME 1 NA NA Yes Yes Yes Yes Yes Yes Yes No Yes No
SME 2 NA NA Yes Yes Yes Yes Yes Yes Yes Yes No No
SME 3 NA NA Yes No Yes No No Yes Yes Yes No Yes
SME 4 NA NA Yes Yes No Yes No No No No No No
SME 5 NA NA Yes No Yes Yes Yes Yes No Yes No No
SME 6 NA NA Yes Yes Yes Yes Yes Yes Yes No Yes No
SME 7 NA NA Yes Yes Yes Yes Yes Yes Yes No Yes Yes
SME 8 NA NA Yes Yes No Yes Yes Yes No No No Yes
SME 9 NA NA Yes Yes No No Yes Yes No Yes Yes No
SME 10 NA NA Yes Yes Yes Yes Yes No No No No Yes
SME 11 NA NA Yes No No Yes Yes Yes No No Yes Yes
SME 12 NA NA Yes Yes No Yes No Yes No No No No
SME 13 NA NA Yes Yes Yes Yes Yes Yes No Yes No Yes
*Difficult to ascertain as these skills are generic and not easily identified through content
analysis.

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The data presented in Table 2 demonstrates that FAs have a broad range of skills. It was

difficult to ascertain generic skills such as ‘analysis’ and ‘communication’ and therefore these

two skills were left unanswered. However, more specific skills, for example - business

valuation, expert testimony, quantification of loss, litigation support, financial investigation

and analysis, risk assessment, E-discovery, provision of due diligence reporting and dispute

advisory were more apparent. The data demonstrates that ten out of thirteen companies have

FAs who have the necessary skills to offer quantification of loss services as well as forensic

investigation and analysis services. Another two common skills offered by forensic

accountants are business valuation and litigation support skills, followed by expert testimony

skills. Further, nine accounting firms have FAs with litigation support and business valuation

skills, whilst eight accounting firms have FAs that offer expert witness services to their

clients. As to the remainder of the skills, five firms offer risk assessment and due diligence

reporting, and six firms offer E-discovery services and dispute advisory.

Control of Entry
Control of Entry refers to the use of certain methods to qualify persons who wish to join the

profession, including passing a specified examination and registering with the profession

(Devonport, 2009). Table 3 presents the findings for the four attributes that help to determine

whether there is evidence of control of entry for FAs. There are three perspectives relevant to

Control of Entry:

• accounting certifications, for example, Certified Practicing Accountant (CPA) or

Chartered Accountant (CA),

• specific forensic accountancy certifications, such as Certified Fraud Examiner (CFE),

and

• demonstration of membership in interest groups set by the Institute of Chartered

Accountants Australia (FASIG and BVSIG).

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Table 3: Coding for Characteristic ‘Control of Entry’
Company Control of Entry (CoE)
No. of FA AC CFE FASIG BVSIG
SME 1 3 2 CAs 0 2 2
1 CPA
SME 2 8 6 CAs 1 5 5
SME 3 5 3CAs 1 0 0
1 CPA
SME 4 1 1 CA 0 0 0
SME 5 13 7 CAs 4 6 1
SME 6 4 4 CAs 0 0 2
1 CPA
SME 7 4 3 CAs 0 0 1
1 CPA
SME 8 2 1 CA 0 0 0
1 CPA
SME 9 11 9 CAs 0 0 0
4 CPAs
SME 10 6 4 CAs 0 0 0
2 CPAs
SME 11 9 7 CAs 0 0 0
2 CPAs
SME 12 6 3 CAs 0 1 1
SME 13 15 13 CAs 0 9 7
2 CPAs

From the data presented in table 3, it can be seen that the qualifications and certifications held

by forensic accountants vary. The majority of forensic accountants have full accounting

qualifications, either a CPA or CA qualification, while three forensic accountants have both.

There are 12 FAs who do not have a formal accounting qualification; however, most of those

12 provide computer forensic services. In addition, it was found that only six out of the 87

FAs in this study had a specialised forensic accounting qualification (CFE).

Regarding professional membership, 23 forensic accountants practicing in Australia are

members of Forensic Accounting Special Interest Group (FASIG) while 19 are members of

the Business Valuation Special Interest Group (BVSIG). Currently, these two interest groups

are the most popular organisations for FAs, probably because they were established by the

ICAA, one of two recognised professional accounting bodies in Australia. For the other 45

19
FAs, it was difficult to determine whether they were members, although general membership

statements on the websites of employers did mention membership, but without identifying

which employees were actually members.

Ethical Codes of Conduct

To determine whether an ethical code of conduct is used to instruct forensic accountants’

behaviour, various accounting profession and government websites were explored for

evidence, including the CPA and CA websites, as well as the website of Accounting

Professional and Ethical Standards Board (APESB). APES 215 and APES 320 are two

standards issued by APESB to direct the quality of forensic services provided by accounting

firms. APES 215 emphasises public interest, professional independence, professional

competence and due care and confidentiality. APES 320 reviews the quality of forensic

services provided by accounting firms based on the requirements mentioned in APES 215.

Accounting firms’ web sites were also investigated to determine whether there was any

ethical code stated that may be used to guide their employees’ behaviour. In some cases, the

code of conduct was described as a ‘Code of Ethics’, and in others, described as ‘Company

Code’ or ‘Core Values’. In each case, the wording suggests their code was used to guide their

employees’ behaviour and provide assurance to those considering hiring their services. Table

4 provides a summary of the findings in relation to the third characteristic of the Theory of

Professions - Codes of Conduct.

Table 4: Coding Data for Characteristic ‘Ethical Codes of Conduct’

Ethical Codes of Conduct (CoC)
Ethical Codes of Conduct or Core Values Proposed by the Companies
Company EC CV CSR

20
 SME 1 No Yes No
SME 2 No No No
SME 3 No No No
SME 4 No No No
SME 5 No Yes No
SME 6 No Yes No
SME 7 No No No
SME 8 No No No
SME 9 No Yes No
SME 10 No No No
SME 11 No No No
SME 12 No No No
SME 13 No Yes No

As quality and accountability of forensic accounting services is an important consideration

for the public, more forensic accounting firms may feel compelled to issue statements on the

quality of their services. However, although the APES 215 suggests that ethical codes should

be used to guide forensic accountants’ actions, it does not provide specific requirements on

how to achieve these goals. As the table shows, none of the SMEs websites analysed in this

study have their own company code of conduct. Five firms state their company’s Core

Values, which are similar to Ethical Codes of Conduct and could therefore also instruct their

employees’ behaviour to some degree. From further analysis of those five firms, it was found

that companies emphasised different aspects of ethical codes or core values. For example,

SME1 sets quality, independence and respect as its priority while SME5 suggests their

employees be respectful, ethical, collegiate, innovative and professional. Both SME6 and

SME13 highlight the importance of communication and effectiveness of delivering services

to their clients. SME9 proposes that support offered by staff and clients may help to build a

self-efficient community. However, even with core value statements, it is still difficult to

determine whether these core values are adhered to. To some degree, the core value

statements may enhance the credibility of the accounting firm in the view of the general

21
public and may provide some assurances about their integrity; however, in practice, it is

difficult to ascertain the extent to which this occurs.

DISCUSSION AND CONCLUSION

The first attribute of the Theory of Profession - Body of Knowledge - includes formal

qualifications, skills and experience. Regarding formal qualifications, findings demonstrate

that higher education within a relevant discipline background is common for forensic

accountants and it is noteworthy that degrees held by FAs vary considerably, for example,

degrees include Accountancy, Business, Economics, Law, Commerce and Science. However,

it was found that a specialised university qualification in forensic accounting is not common

in Australia. This supports findings by DiGabriele (2010) and Razaee & Burton (1997) who

suggest that there is a lack of properly qualified forensic accountants. In fact, only two

forensic accountants from a total of 87 hold a Master of Forensic Accounting degree from the

University of Wollongong in Australia, which is the only university in Australia to offer a

comprehensive forensic accounting course. Many other universities offer single units or

minors in forensic accounting, eg Monash University offers a Graduate Certificate in

Forensic Accounting. However, the course focuses on law and expert witness services which,

although important skills, overlooks many other FA skills and services. As Buckoff and

Schrader (2000) suggest, adding forensic accounting courses to an accounting curriculum

could benefit all stakeholders; however, findings demonstrate that a major limitation in

Australia is the lack of comprehensive forensic accounting degrees covering a broad range of

skills, knowledge and theory.

Another consideration raised in the literature is that universities provide a high standard of

forensic accounting education to benefit students and the industry, not only in regard to the

specific knowledge related to their expertise, but also ethical values and legal issues (Cohen

22
& Pant, 1991; Devonport, 2009; Maurice, 1996; Gaffikin, 2009). Findings from this study

suggest that the industry is in need of forensic accountants who receive a specialised and

comprehensive forensic accounting curriculum, including ethics and law. However, few

universities offer specialised programs (with the notable exception of Monash University’s

Graduate Certificate in Forensic Accounting).

In regard to the attribute of skills, analytical and communication skills (such as those needed

for expert testimony), and business valuation and computer skills are important for FAs

(McMullen & Sanchez, 2010). The findings demonstrate that not all forensic accountants

acquire the broad range of skills that may be needed to undertake the many complex forensic

accounting services they offer. Although skills held by Australian forensic accountants are

substantial, findings suggest they vary from firm to firm and also from individual to

individual. This is not a criticism as FAs may be required to specialise in certain aspects of

the profession. However, it adds to the difficulty of identifying and/or defining exactly what

an FA does and how that fits into the Theory of Profession framework.

In terms of experience, findings suggest that a majority of forensic accountants have a range

of experience working in various aspects of the field, and is a strength within the profession.

For example, many FAs have experience in auditing and handling family law disputes, which

supports suggestions by McMullen & Sanchez (2010) and Koh et.al. (2009) that experience

in the field is equally important for forensic accountants. According to Boys (2008), general

knowledge and skills may be acquired from a university education, while other skills may be

better learnt from experience in the industry. Findings demonstrate that a majority of FAs

have substantial experience in various aspects of the profession, including auditing, business

valuation and family law.

23
The second characteristic from the framework is Control of Entry, which includes using a

robust qualifying examination system to test the competence of members and the registering

of those qualified members within the profession (Devonport 2009; Canning & O’ Dwyer

2001). Findings demonstrate that there is no official control of entry for FAs in Australia,

which Lawrence (2011) suggests may heavily impede the professionalisation of forensic

accounting. Findings also suggest that there is no compulsory requirement for basic

accounting qualifications imposed on FAs; however, most FAs in this sample do have an

accounting certification (CA or CPA). However, there are twelve forensic accountants from

the 87 sampled that do not have any accounting certification.

The second attribute of Control of Entry is forensic certification. In the USA, the

accreditation exam (Certified Fraud Examiner) is used to qualify members of the FA

profession, and the Association of Certified Fraud Examiners (ACFE) requires all qualified

members to register with the association and includes continuing education for its members

(Kranacher et al., 2011). The strategy applied in the USA is recommended by Devonport

(2009), who highlights the essence of using a specific examination system to qualify the

members of a profession. Findings demonstrate that only six out of 87 forensic accountants

acquired the qualification of CFE to undertake forensic accounting services in Australia.

In Australia, an examination is not a formal requirement to qualify forensic accountants, nor

is there an organised association established to formally control the entry of forensic

accountancy. However, the Forensic Accounting Special Interest Group (FASIG) established

by the ICAA in 1999 was set up with the aims of assisting chartered accountants to maintain

high professional standards when acting as FAs and to promote a better understanding of the

value of forensic accounting services to those groups who use or rely upon the work of expert

accountants (FASIG 2011). In collaboration with CPA Australia, the group has formulated a

Statement of Forensic Accounting Standards, which is binding on members, and a breach

24
may lead to disciplinary proceedings. However, it is not compulsory for FAs to join this

group and therefore, standards are only binding on those who decide to join.

The consequence of having no requirement to join FASIG or become certified through the

ACFE means that ongoing educational development is lacking in Australia in the field of

forensic accounting. Ongoing educational training provided by the forensic accounting

profession could not only update and share relevant forensic accounting knowledge to its

members, but also promote ethical behaviour (Jackling et al., 2007). Therefore, due to the

lack of formal control of entry into the forensic accounting profession in Australia, members

may not be registered.

Findings on the third characteristic – Ethical Codes of Conduct - suggest that there is little

evidence that there is consistency in promoting ethics within the industry. None of the

thirteen SMEs had a code of conduct to instruct their employees’ behaviour, while only five

firms highlighted their companies’ core values, which are similar in nature to a code of

conduct. In comparison, the Big Four accounting firms in Australia advertise their company

codes of conduct, which emphasise their company’s core values, responsibilities and ethical

decision making framework to help guide their employees’ behaviour. It is also worth noting

that the ethical codes issued by the accounting profession and the core values advocated by

the thirteen SMEs used in this study have not identified specific requirements to achieve the

purpose of regulating forensic accountants’ actions. APES 215 provides an abstract concept

of ethical standards, namely public interest, professional independence, professional

competence and due care and confidentiality (APESB, 2008). However, the manner or

method of achieving each of these ethical codes, or core values, is not specified on the

websites of the SMEs analysed in this study. As Jackling et al. (2007) state, the weakness in

evaluating ethical behaviour is one of the most critical causes of ethical failure, which

25
suggests that this may be a problem in Australia. Being a FA is not only about mastering

sufficient expertise, knowledge, skills and experiences, but also about establishing a good

reputation, and being objective, independent, credible and addressing public interests

(Cohen& Pant. 1991). Therefore, specific instructions to guide forensic accountants’ ethical

behaviour may improve the integrity of the forensic accounting profession (Maurice, 1996;

Fournier 1999; Cohen & Pant, 1997).

Conclusion
This paper sought to answer the research question: Are Australian forensic accountants’

adequately qualified to undertake forensic accounting work and does the industry protect

public interests? The adapted Theory of Profession framework provided a lens with which to

gain deeper insights into the forensic accounting profession in Australia using the three

characteristics: Body of Knowledge, Control of Entry and Ethical Code of Conduct. The

framework was useful for guiding data collection and analysis, and identifying the

qualifications, certifications and ethical codes currently at play in the Australian forensic

accounting industry. However, although it was relatively straight-forward identifying the first

two characteristics from the SMEs websites, the third characteristic – Ethical Codes of

Conduct - remains unclear as a statement outlining the core values of an organisation does

not necessarily equate to ethical conduct by its members.

This study has identified substantial disparity within the industry in regard to the three

characteristics of the Theory of Profession with a plethora of qualifications, skills,

certifications and experience amongst the 87 FAs analysed. Should bodies such as the CPA

and ICAA wish to implement a system of accreditation as they do for chartered accountants

and/or certified practicing accountants, requirements relating to qualifications, experience,

continuing education and professional standards and ethics may need to be standardised

throughout the profession. An inherent difficulty in moving in that direction relates to the

26
wide range of services and their related specialisations. For example, FAs working largely in

the forensic accounting arena undertake quite different tasks compared with those providing

litigation advice, expert witness services, computer forensic investigation or family law

dispute investigations.

This study has contributed to accountancy literature by adapting previous literature on

‘professions’ into a framework to aid in identifying whether the forensic accountancy

industry could be considered a profession. Further, the framework was operationalised by

coding the various aspects of each characteristic, comprehensively addressing the complex

roles and tasks that being a FA entails. The paper has also identified the current state of the

FA industry in Australia, providing a deeper understanding of how it is structured at this

time. Universities considering development of additional forensic accounting units or full

degrees may therefore benefit from the findings in this study.

From an industry perspective, accounting bodies such as CPA and the ICAA have been

provided with deeper insights into the current state and composition of the industry and may

now more readily identify the elements required to professionalise FAs should they wish to.

Findings also identify weaknesses within the forensic accounting industry in the areas of

ethics, minimal numbers of FAs with certification, and a lack of specialised forensic

accounting qualifications - all of which may be used to guide the development and maturity

of the profession in the short- to medium-term.

Limitations of this study include the inability to probe further on issues such as experience,

ethics and mentoring programs, all of which are not easily identifiable from content analysis

of websites. However, the majority of characteristics suggested in the literature that together

help to construct a ‘profession’ were able to be analysed and reported. Time and cost

constraints inhibited the ability of the researchers to undertake interviews, which had they

27
occurred, would have overcome identified weaknesses in addressing all aspects of the Theory

of Profession framework. However, the study was exploratory in nature and it is hoped that

future research in this area will further develop the framework. It would also be worthwhile

separating out forensic accountants, forensic investigators and computer forensic experts in

future studies as each have quite different qualifications, skills and experience within the

forensic accounting industry.

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APPENDIX
Explanation of Coding for the adapted Theory of Profession Framework
Attribute Code Questions
Body of Knowledge (BoK)
University Degree BoK- UD Do forensic accountants have university
qualifications?
Accounting Degree BoK- AR Do forensic accountants have a major in an
accounting related discipline?
Law Degree BoK- LR Do forensic accountants major in law related
disciplines?
Science (Computer) BoK- CR Do forensic accountants major in science
Degree (computer) related disciplines?
Specialised Forensic BoK- FA Do forensic accountants have a specialized
Accounting Education forensic accounting degree?

Average years of BoK- <20 Are the average years of experience less than 20
experience (<20 years) years?
Average years of BoK- <25 Are the average years of experience less than 25
experience (<25 years) years?
Average years of BoK- <30 Are the average years of experience less than 30
experience (<30 years) years?
Court Experience as an BoK- EW Do forensic accountants have court experience to
Expert Witness testify as an expert witness?
Fraud Investigation and BoK- FI Do forensic accountants have fraud investigation
Auditing Experience and auditing experience?
Litigation Advisory BoK- LA Do forensic accountants have experience in
Experience providing litigation advice or in the preparation of
court documentation?
Computer Forensic BoK- CF Do forensic accountants have computer forensic
Experience experience?
Research Experience BoK- RE Do forensic accountants undertake research and
publish articles on forensic accounting related
topics?
Analytical Skills BoK-AS Do forensic accountants have analytical skills?

Communication Skills BoK-CS Do forensic accountants have communication

skills?
Relevant discipline and BoK-D&E Do forensic accountants have skills acquired from
experience relevant disciplines and work experience?
Business Valuation BoK-BV Do forensic accountants have business valuation
Skills skills?
Expert Testimony BoK-ET Do forensic accountants have expert testimony
Skills skills/experience?
Quantification of Loss BoK-QD Do forensic accountants have quantification of
Skills loss skills?
Litigation Support BoK-LS Do forensic accountants have litigation support
Skills skills?

31
Forensic Investigation BoK-I&A Do forensic accountants have forensic
and Analysis Skills investigation and analysis skills?
Risk Assessment Skills BoK-RA Do forensic accountants have risk assessment
skills?
E- Discovery Skills BoK-ET Do forensic accountants have E- Discovery skills?
Provision of Due BoK-DD Do forensic accountants have skills to provide due
Diligence Reporting diligence reporting?
Dispute Advisory BoK-DA Do forensic accountants have skills to provide
Skills dispute advisory services?
Control of Entry (CoE)
Accounting CoE- AC Do forensic accountants have accounting
Certification certification, such as Certified Practicing
Accountant (CPA) or Chartered Accountant (CA)?
Qualification - CoE- CFE Do forensic accountants have a specialized
Certified Fraud forensic accountant certification, such as Certified
Examiner Fraud Examiner (CFE) from the Association of
Certified Fraud Examiner (ACFE)?
Forensic Accounting CoE- Are forensic accountants members of the Forensic
Special Interest Group FASIG Accounting Special Interest Group?

Business Valuation CoE- Are forensic accountants members of the Business

Special Interest Group BVSIG Valuation Special Interest Group?

Ethical Codes of Conduct (CoC)

Company codes of CoC- CC Does the firm providing forensic accounting
conduct services have a company ethical code of conduct
to instruct their employees’ behavior?
Company Core CoC- CV Does the firm emphasize core values of the
Values company to their employees?
Specific requirements CoC- CSR Is there any specific requirement set up for
for instituting achieving their company codes or core value?
codes/values

32